The Financial Supervision Authority is to restrict the activities of Aktsiaselts Talveaed
The Financial Supervision Authority discovered widespread breaches of the rules in the activities of Aktsiaselts Talveaed and in its decision of 22 January 2018 placed substantial restrictions on the activities of the payment institution.
The Financial Supervision Authority discovered that Talveaed had not complied with all of its obligations under the Payment Institutions and E-money Institutions Act and the Money Laundering and Terrorist Financing Prevention Act in providing payment services.
Among other issues, Talveaed was found to have breached the requirement to have adequate internal audit measures and the requirement to implement internal rules. It has also failed to apply diligence measures correctly and to inform the Financial Intelligence Unit about transactions where there is a suspicion of money laundering.
As the breaches of the rules were partly caused by problems with a risky non-resident provider of payment services, the Financial Supervision Authority decided to ban Talveaed from making certain transactions with clients where at least one of the actual beneficiaries is not a resident of the Republic of Estonia.
“Our supervision revealed substantial shortcomings in the activities of the payment institution. It did not have a satisfactory overview of the activity profile of its own clients, the purposes of their transactions, and the original sources of funds for example, and it also failed to meet the legal requirements for the internal organisation of payment institutions”, explained Kilvar Kessler, chair of the board of the Financial Supervision Authority.
He pointed out that such a case could not be tolerated indefinitely, as it threatened the trust and credibility of the Estonian financial system. “Until it has managed to get its own house in order, Talveaed will not be able to create new business relations directly or indirectly with non-resident clients or continue its existing relations except to end them”.
Aktsiaselts Talveaed now has four months to bring its activities into line with the legal requirements, otherwise the Financial Supervision Authority can withdraw its payment institution licence.
The Financial Supervision Authority issued Talveaed an additional activity licence to provide payment services in February 2016. Since then the payment services it has provided have been: payments into payment accounts and cash withdrawals from payment accounts; execution of payment transactions, including transfers of funds to payment accounts opened with a payment service provider and execution of payment transactions where money is lent to the client of a payment institution; and the issuance and acquisition of payment funds, payment instruments and means of payment.